It doesn't make any sense to invest in development to make a cheaper product when you can simply lower the cost by absorbing the development cost of a previous

It doesn't make any sense to invest in development to make a cheaper product when you can simply lower the cost by absorbing the development cost of a previous generation that is still great and runs the latest software because it had a generous design and specs to begin with. Heck, I still own only an iPhone 3GS, it works fine. The "low-cost" strategy is for companies that have slim margins on a high-end line (that serves mainly as a way to advertise the brand and relate it to high-quality), but really make the bulk of the profits on poor-quality low-end. E.g.: cars, DSLRs cameras, running shoes... almost all manufacturers work like that nowadays.